Will the $199 iPhone kill the iPod?

Implications: At $199 the iPhone with iPod capabilities looks like an iPod killer. Will Apple kill off its own golden goose or is it planning a new product to move the iPod back up the ladder. Have we overlooked something in the long term of iPhone vs. iPod?

Analysis: With the iPhone at $199 many articles have been written that the iPod killer is finally here with the new iPhone, after all it can be the same as an iPod. But over looked is the real the real cost of the iPhone is not truely $199.00.
The real problem is that the iPhone has a $325 payment made
against the purchase price by the operator and you a hidden payback
each month. Any iPod you pay the full price up-front. The selling
factor – you don't pay $70 a month. So over a two year period you are paying $1879 plus any extras. But, if you purchase a new iPod you are paying the purchase price of the iPod and that's it. Since Apple is no longer getting revenue sharing on the iPhone they are going to want to sell as much hardware as possible. All indications are a new line up of iPods for this fall that look very much like an iPhone missing only the telecommuncations part.

iPod sales have been drifting downwards, a new sizzle product is what is needed to reverse this trend. Look for a fall introduction of a new iPod.